Arizona AG Brnovich sues Board of Regents over ASU real estate deals

PHOENIX – Arizona Attorney General Mark Brnovich has picked another legal fight with his alma mater.

Brnovich filed a lawsuit in Arizona Tax Court on Thursday against the Arizona Board of Regents, which governs the state’s three public universities, alleging that Arizona State University has misused its tax-exempt status to benefit private developers.

The 18-page lawsuit says ASU has made real estate deals that “shield selected companies from property taxes while generating revenue for ABOR and ASU.”

“We believe that ASU is improperly trading its tax status in order to strike unfair deals with big companies, like the Omni Hotel chain,” Brnovich told KTAR News 92.3 FM.

Brnovich said ASU has made several deals where property was leased to be developed by private companies, who then transferred the properties back to the university.

That back-and-forth process takes the improvements to the property off the tax rolls, he said.

“So the new building, whether it’s a hotel or some sort of real estate development, then has a competitive advantage because it’s not paying those taxes,” Brnovich said.

“We as taxpayers lose out because someone’s not paying those taxes. And all the while, Arizona State University is basically picking winners and losers and giving a benefit to whoever it wants.”

ASU President Dr. Michael Crow told ABC15 he was “confused how our own lawyer is suing us.”

“If the university finds resources to pay for the university through the use of its property, that’s fully allowable under the constitution,” Crow said.

Brnovich, who won re-election in November, said he filed the lawsuit to prevent a deal between ASU and Omni for a hotel and conference center near downtown Tempe from going forward in its current form.

“If it does go forward, Omni Hotel should be required to pay the proper property taxes,” he said, adding that previous ASU deals followed a similar pattern.

In 2017, Brnovich sued the board over tuition rates at ASU, the University of Arizona and Northern Arizona University that he claimed were high enough to violate the state’s constitution.

A Maricopa County Superior Court judge dismissed the case in April 2018, ruling that Brnovich had no authority to sue over the issue.

However, Brnovich filed an appeal in July.

“My job as attorney general is to protect hard-working Arizona taxpayers, and that’s what I’m going to do,” he said Thursday.

“And if it means taking on my alma mater where I went to school, if it means taking on the powerful and politically connected, I’ve got to do it.”